Business

McDonald’s expects to hike its capital spending through 2027 as it accelerates its new restaurant openings.The company also wants to add 100 million members to its loyalty program as part of its strategy to grow its global sales.

A McDonald’s store sign in Austin, Texas, Oct. 30, 2023.
Brandon Bell |Getty Images

McDonald’s wants to open more than 8,800 locations and add 100 million members to its loyalty program by 2027.
The targets are part of the fast-food giant’s long-term plans to grow sales across its already sprawling restaurant footprint.

McDonald’s announced its new goals ahead of its investor day on Wednesday, as it looks to persuade shareholders that diners’ appetites for its Big Macs and McNuggets are still growing, even as Wall Street worries about the economy and the threat posed by weight-loss drugs. The burger chain is expected to offer more details about how it plans to keep attracting customers, including by phasing in an improved version of its burger and doubling down on chicken.
For 2024, McDonald’s is projecting net new restaurant growth of 4%. Nearly 2% of next year’s systemwide sales growth in constant currency will come from adding to its footprint.
After 2024, the company plans to grow its restaurant count by 4% to 5% annually. Those new locations will contribute about 2.5% of systemwide sales growth in constant currency.
McDonald’s big development plans will mean higher capital spending. For 2024, the company anticipates $2.5 billion in capital expenditures, up from its expectation of $2.2 billion to $2.4 billion in 2023. And for every year from 2025 through 2027, McDonald’s expects to increase its capital expenditures by $300 million to $500 million sequentially.
By 2027, McDonald’s wants a global footprint of 50,000 locations. The chain had 41,198 restaurants worldwide as of Sept. 30. For comparison, Starbucks in November said it aims to reach 55,000 cafes worldwide by 2030, up from its current count of more than 38,000.

To reach its development target, McDonald’s plans to open 900 U.S. locations, 1,900 restaurants in its international operated markets segment and roughly 7,000 units in its international developmental licensed markets division.
The company’s IOM business includes markets like France, Canada and Australia, and accounts for nearly 50% of the company’s revenue.
McDonald’s IDL segment includes China, which will account for more than half of the division’s new locations. In late November, McDonald’s announced it had bought back a minority stake in its China business, which currently has a footprint of more than 5,500 restaurants.
“There’s no reason why China can’t be [20,000] to 25,000 stores or restaurants — it could be the largest market for us around the world,” McDonald’s CEO Chris Kempczinski said.
Executives have said that its current footprint is outdated and doesn’t reflect where consumers currently live, including the shift to the South and Southeast in the U.S.
In January, Kempczinski said in a broader announcement about a corporate restructuring that the company would accelerate new restaurant development. This is the first time the company has disclosed its new development targets.
The company’s expansion will go beyond its ambitious plan to open new flagship restaurants. It will also test 10 locations of a spinoff brand, CosMc’s, by the end of 2024. The first will open this week in Illinois.
In addition to its ambitious plans to expand its footprint, McDonald’s wants to reach a quarter of a billion active members for its loyalty program by 2027. At its last investor day, in 2020, the company was still testing the loyalty program in the U.S. But since then, it has grown to be a juggernaut, boosting mobile sales and encouraging customers to return more frequently.
McDonald’s is leaning into its loyalty program as marketers fear a “cookieless future,” where third-party data on its customers dries up, according to Morgan Flatley, McDonald’s global chief marketing officer and executive vice president of new business ventures. Instead, by adding new ways to earn points like watching sports games on its app, and perks like transferring points to family and friends, McDonald’s is preparing to rely only on a trove of data it collects through its own mobile app.
“In the future, data will sit alongside restaurant locations as another significant competitive advantage,” McDonald’s U.S. President Joe Erlinger told investors on Wednesday.
McDonald’s also announced a partnership with Alphabet’s Google Cloud, using its artificial intelligence across its restaurants to improve operations.
“We’re excited to see how McDonald’s will use our generative AI, cloud, and edge computing tools to improve their iconic dining experience for their employees and their customers all over the world,” Alphabet CEO Sundar Pichai said in a statement.
Clarification: This story was updated to reflect that McDonald’s systemwide sales projections relate to the new restaurant openings. More

Disney is beginning to roll out a Hulu integration on its Disney+ streaming platform.
The company had previously offered a bundle of Disney+ and Hulu, but Wednesday’s release is part of a push to integrate the two platforms.
It comes after a slew of other streaming bundles have made their way onto the market.

The Disney+ website on a laptop computer in the Brooklyn borough of New York, US, on Monday, July 18, 2022.
Gabby Jones | Bloomberg | Getty Images

Disney is beginning to roll out a Hulu integration on its Disney+ streaming platform in a bid to bundle subscribers. The full launch is expected March 2024, Disney said Wednesday.
The company offers a bundle of Disney+ and Hulu, but Wednesday’s release is part of a push to integrate the two platforms. Disney last month agreed to buy the remaining one-third stake in Hulu that was owned by Comcast’s NBCUniversal.

The Hulu integration is available to people who subscribe to the bundle, albeit in a limited form for now, according to a post on Disney’s website.

Disney streaming prices

Disney+ with ads: $7.99 a monthDisney+ without ads: $13.99 a monthHulu with ads: $7.99 a monthHulu without ads: $17.99 a monthDisney+ and Hulu with ads: $9.99 a monthDisney+ and Hulu without ads: $19.99 a monthDisney+, Hulu and ESPN+ with ads: $14.99 a monthDisney+, Hulu and ESPN+ without ads (Disney+ and Hulu): $24.99 a month

“It’s an unbelievable value in terms of the price point for the Bundle,” Joe Earley, president of direct-to-consumer for Disney, said in a statement. “Beyond unlocking that experience for our existing Bundle subscribers, our hope is to inspire Disney+ and Hulu standalone subscribers to upgrade to the Bundle as well, once they see everything that can be accessed.”
The two streaming platforms differ in their content offerings, with Disney+ geared toward family-oriented content and Hulu oriented more toward adult dramas and unscripted TV. The gradual launch of the integration will give parents a chance to adjust parental controls before the full release in March, Disney said.
The beginning of the integration comes after a slew of other streaming bundles have made their way onto the market.

Paramount and Apple were reported last week to be mulling a bundle of the company’s streaming platforms. Streaming leader Netflix and Warner Bros. Discovery’s Max have also partnered with Verizon, which will offer a bundle of the two platforms.
Disney first announced its bundle of Disney+, ESPN+ and Hulu in 2019.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC. More

For someone who despises the advertising industry, Elon Musk has a way with viral slogans. At a New York Times event on November 29th the world’s richest man was asked how he felt about firms pulling ads from X, the social network he bought last year when it was known as Twitter. “If somebody’s going to try to blackmail me,” he replied, “go fuck yourself.” The “GFY” approach, as he dubbed it, may come naturally to billionaires. But it is bold for a company that last year made 90% or so of its revenue from ads. Those that have pulled ads from X include Apple and Disney, whose presence Mr Musk previously cited as evidence that X was a safe space for brands.Advertisers are worried about unsavoury content on the platform. Since Mr Musk fired 80% of X’s staff, including many moderators, more bile seems to be leaking through the filters. Last month Media Matters for America, a watchdog, reported that ads for brands such as IBM had appeared alongside posts praising Adolf Hitler (X disputes this and is suing Media Matters). Social networks are freer than mainstream media to tell advertisers to get lost. Whereas a typical TV network in America gets most of its ad revenue from fewer than 100 big clients, social networks can have millions of small ones. A year ago the largest, Facebook, was getting 45% of its domestic sales from its 100 biggest advertisers, reckons Sensor Tower, a research firm; a boycott against it in 2020 by more than 600 firms, including giants like Unilever and Starbucks, had little effect on sales. But X lacks Facebook’s sophisticated ad-targeting apparatus, and relies on campaigns by big brands. In October 2022, when Mr Musk bought Twitter, its 100 top clients accounted for 70% of American ad sales.image: The EconomistHalf of them have since left X, Sensor Tower says. On December 1st Walmart said it had gone, owing to its ads’ poor results on X. The impact has been severe. In September Mr Musk said that X’s American ad business was down by 60%. Advertisers in other regions may be less bothered by the culture wars that Mr Musk is fighting. But X is unusually reliant on America. Whereas Meta, Facebook’s parent company, makes most of its money abroad, 56% of Twitter’s revenue came from America before Mr Musk bought it. Even before GFY, Insider Intelligence, another research firm, expected X’s worldwide ad sales to fall by more than half this year (see chart).Mr Musk’s fans insist being rude to air-kissing admen and “woke” brands delights X’s everyman users. X still has nearly five times as many as Threads, a newish rival from Meta. Yet Sensor Tower reports that the X app is being downloaded less often than a year ago, and estimates that it has lost 15% of monthly users. Some observers put this down to a purge of bots and fake users. Still, X must monetise the users it has in new ways to make up for the declining ad dollars. One idea is X Premium, which offers extra features and fewer ads for between $3 and $16 a month. So far there seem to be few takers: Sensor Tower estimates that X has sold $60m-worth of subscriptions in the past year, equivalent to 1% of pre-Musk annual ad sales. Mr Musk has talked of turning X into an “everything app”, handling payments, calls and more. But even optimists concede this would take years.Until then, the aim is to replace the departing big advertisers with an army of little ones. X is said to be working on its ad technology for smaller firms, eyeing a Facebook-like long tail of clients. There is no time to lose. Further drops in ad revenue could necessitate a bail-out from investors, or from Mr Musk himself. X’s employees have their work cut out to attract advertisers faster than their boss repels them. ■ More

In a CNBC interview, Walmart CEO Doug McMillon said consumer spending is tougher to predict next year because of rising credit card balances and dwindling household bank accounts.
Deflation has brought down the prices of some general merchandise items, such as toys, he said.
Lower prices will mean Walmart and other retailers will have to drive more volume.

Holiday shoppers are turning to Walmart for groceries and gifts, but CEO Doug McMillon said it’s hard to predict how sales will look in the months after the peak shopping season.
In an interview with Sara Eisen that aired Wednesday on CNBC’s “Squawk on the Street,” the leader of the world’s largest retailer said higher credit card balances and dwindling household bank accounts raise questions about how much consumers will spend — even after they showed more resilience than expected this year.

“If we had been talking last spring or at the beginning of last year, I expected more softness by this time of the year than we’re actually experiencing,” he said. But, McMillon added, “next year’s a different story.”
Deflation in some items is creating a new dynamic for Walmart, McMillon said. In general merchandise, the category that includes electronics, toys and other nonfood items, prices have dropped by about 5% compared with a year ago, he said.
For example, this holiday season Walmart has 25 toy items under $25, including a Hot Wheels car for $1.18, McMillon said.
Prices in food categories are about where they were a year ago, though fresh foods tend to fluctuate, he said.
McMillon said the company has seen the volume of its nonfood sales “start to come back.” Back-to-school helped drive some of that rebound.

“It’s going to be interesting to watch what happens in the general merchandise categories in the year ahead because prices are so much lower,” he said.
Walmart has stood apart from many other retailers over the past year, as its large grocery business and low-price reputation have propped up its revenue and stock price during a period when retail sales have weakened. As of Tuesday’s close, Walmart shares had climbed nearly 10% this year, and they hit an all-time high in mid-November.
The discounter gave a lower-than-expected full-year forecast in November, but unlike Target, Macy’s and other retailers, it projected sales growth. Walmart expects consolidated net sales will rise 5% to 5.5%, and adjusted earnings per share will be $6.40 to $6.48 for the fiscal year.
Deflation — or falling prices — will bring tough comparisons for Walmart and other retailers. If each item costs less, companies will have to work harder to sell more items.
McMillon said he’s confident Walmart can drive growth, even in that environment. And, he said, shoppers need pressure on their budgets to ease, too.
Despite the challenges deflation would create for Walmart, “we’d rather have lower prices than higher prices,” he said.
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Walmart CEO Doug McMillon said the hiring and wage environment is “more normalized.”
In an interview with CNBC, the retail chief said wages are still going up, but “the percentage increase won’t be as much as it was.”
He said artificial intelligence is also changing employees’ roles across stores and in warehouses.

A worker stocks the shelves at a Walmart store on January 24, 2023 in Miami, Florida. Walmart announced that it is raising its minimum wage for store employees in early March, store employees will make between $14 and $19 an hour. 
Joe Raedle | Getty Images News | Getty Images

After pandemic-fueled higher turnover and fiercer competition for workers, Walmart CEO Doug McMillon said it’s gotten easier to hire people and get them to stick around.
“It’s more normalized,” McMillon said in an interview with CNBC’s Sara Eisen that aired Wednesday on “Squawk on the Street.” “The unusual employment market that we saw the last few years has changed. We are able to staff around the country. Our turnover’s down. We’ve got more continuity, which is helping a lot.”

As the nation’s largest private employer and largest grocer, Walmart is closely watched as a barometer of both the health of the consumer and the strength of the country’s labor market. It has about 1.6 million employees in the U.S. This spring, Walmart raised the minimum wage to $14 for store employees. Its previous minimum wage was $12 an hour. Its competitors, Target, Amazon and Best Buy, had already hiked their own minimum wages to $15 an hour.
Earlier this year, Walmart signalled a potentially cooling labor market, too. It cut the starting pay for new store employees who pick and pack online orders and stock shelves by about a dollar an hour.
The labor market has cooled according to government data, too. Job openings fell in October to their lowest level in two and a half years, the Labor Department reported. The ratio of job openings to available workers is nearly at pre-pandemic levels, with the ratio at 1.3 to 1.
McMillon said in the interview that aired Wednesday that even when gearing up for the busier holiday season, the company did minimal hiring because it was “pretty much staffed.”
During the pandemic, on the other hand, Walmart’s workforce faced a lot of change and complexity, he said. The company hired bartenders, waiters and other people who were out of work and new to retail. It also dealt with store workers who had to take leave when sick with Covid.

He said wages are still going up, but “the percentage increase won’t be as much as it was.”
“It’s more normalized as well,” he said.
Yet for U.S. consumers, the road ahead isn’t as clear. He said next year could bring tighter budgets at households, even as prices fall on some items.
Generative artificial intelligence has started to change employees’ jobs, too, McMillon said. As the company drives greater productivity with the technology, he said he expects the workforce to stay the same size, but shift to different roles.
He said he expects fewer employees in store backrooms, but more on the sales floor. As Walmart adds automation to its supply chain, he said employees will supervise rather than take on physically intensive tasks.
“That’s what we’d really like, to have people extend their careers and be able, when work is over, to be able to go coach their kids’ soccer teams instead of being tired because they lifted so much weight all day,” he said. More

Women’s sports saw a major increase in ticket sales this year, StubHub said.
Lionel Messi’s U.S. debut provided a major boost to MLS and Inter Miami.
Taylor Swift brought strong ticket demand for the NFL’s Kansas City Chiefs this season.

Addison O’Grady #44 of the Iowa Hawkeyes rebounds against LaDazhia Williams #0 of the LSU Lady Tigers during the 2023 NCAA Women’s Basketball Tournament National Championship at American Airlines Center on April 2, 2023 in Dallas, Texas.
C. Morgan Engel | Ncaa Photos | Getty Images

Women’s sports had a banner year in 2023, according to a new report released by StubHub on Wednesday.
Ticket sales for women’s sports on the platform boomed to record growth, according to the resale site’s Year in Live Experiences report.

Nowhere was that more true than in college sports. Demand for women’s basketball Final Four tickets on StubHub was higher than it was for men’s basketball Final Four seats for the first time, as the LSU Lady Tigers went on to win their first NCAA championship. Total sales were six times higher than in last year’s women’s tournament, and ticket prices were 15% higher than in the 2023 men’s Final Four.
Football often dominates the U.S. sports landscape, but don’t tell that to Nebraska. The Nebraska Cornhuskers women’s volleyball team fetched a 60% higher average ticket price on StubHub than Cornhuskers football did this year.
Nebraska’s matchup against the University of Nebraska Omaha Mavericks on Aug. 30 set the world record for women’s sports attendance with 92,003 fans. Stubhub said it was the site’s bestselling volleyball game ever.
“It doesn’t matter what sport, college sports have seen a massive uptick in demand across all live events, and certainly on the women’s side,” said Adam Budelli, a StubHub spokesperson.
The WNBA also scored big in 2023, as attendance rose 16% and viewership jumped 21% year over year, the league’s most-watched season in 21 years. Trends on StubHub mirrored the league’s broader success.

StubHub said overall ticket sales for the 2023 WNBA season more than doubled from the prior year. Sales for the Las Vegas Aces’ WNBA Finals victory over the New York Liberty were StubHub’s highest ever for the league’s championship series, tripling from the previous season.
Women’s soccer was also on a roll. As the National Women’s Soccer League breaks new milestones in areas from attendance to viewership and team valuations, Stubhub said ticket sales for the season doubled those from 2022. Angel City FC, the team owned by celebrities such as Natalie Portman and Serena Williams, was the highest-selling club on the platform, as sales spiked 62% compared with 2022.
Finally, sales for women’s tennis jumped 30% versus 2022, as the number of tickets sold climbed 42%. Once Coco Gauff secured her spot in the U.S. Open finals, total sales increased 20% overnight, StubHub said.
StubHub saw several other key trends emerge in what it called a strong year for sports ticket sales.

The Messi effect is real

Inter Miami forward Lionel Messi (10) celebrates after scoring a goal against Orlando City in the first half of a Leagues Cup Round of 32 match at DRV PNK Stadium on Wednesday, Aug. 2, 2023, in Fort Lauderdale, Florida. (Matias J. Ocner/Miami Herald/Tribune News Service via Getty Images)
Matias J. Ocner | Miami Herald | Getty Images

Lionel Messi’s U.S. debut captured the world’s attention — and ticket buyers’ wallets. Stubhub saw average ticket prices for Inter Miami games nearly triple after the superstar signed with the team in June.
Not surprisingly, Inter Miami rose to become the bestselling club, outselling the No. 2 team, LAFC, by 85%.
Messi wasn’t just good for Miami. He also helped drive ticket sales on the road. For example, LAFC averaged about $145 per ticket on StubHub for the season — when the team hosted Inter Miami, the average price rose to more than $800.
Budelli said StubHub expects MLS sales will increase again next year, particularly among international fans.

The NFL (Taylor’s Version)

Taylor Swift and Brittany Mahomes react during a game between the Los Angeles Chargers and Kansas City Chiefs at GEHA Field at Arrowhead Stadium on October 22, 2023 in Kansas City, Missouri.
David Eulitt | Getty Images

Taylor Swift’s influence on the NFL season — not to mention her dominance of the music world — showed in StubHub’s data.
“Taylor Swift is certainly the story of 2023 whether it’s her own tour or the excitement she brought the NFL,” Budelli said.
The pop singer’s relationship with tight end Travis Kelce meant America’s sweetheart was a frequent guest at Kansas City Chiefs games. The “Blank Space” singer not only helped TV ratings, but also ticket sales.
After Swift’s first appearance at the Sept. 24 Chiefs game, StubHub saw sales for Chiefs home games more than triple.
Off the football field, Swift’s Eras Tour was the biggest in StubHub’s history. She was also the most searched act in 2023.
Looking ahead to 2024, StubHub is banking on another strong year of Swift sales, as U.S. buyers account for over half of tickets purchased for Swift’s international shows in 2024 on StubHub and viagogo, another platform StubHub owns.

Vegas in the spotlight

Ferrari driver Carlos Sainz of Spain drives past the Sphere during the F1 Las Vegas Grand Prix on Saturday, November 18, 2023 on the Las Vegas Street Circuit in Las Vegas, NV.
Icon Sportswire | Icon Sportswire | Getty Images

The ticketing company said it is paying close attention in 2024 to Las Vegas, which will hold its first Super Bowl next year.
Sin City vaulted into the sports scene in recent years, and ticket demand is closely following suit. The Stanley Cup-winning Vegas Golden Knights are the bestselling NHL team in 2023 on StubHub, with tickets sales nearly triple those of last year. The NFL’s Las Vegas Raiders are the third-highest selling team in that league.
StubHub is also watching Formula 1 closely, as the races made up nearly 40% of its top events in 2023.
In November, the Formula 1 Las Vegas Grand Prix brought in fans from all over the world, making it the third most popular U.S. event for international buyers on StubHub.
Budelli also said the Vegas Sphere, the immersive concert and event venue that opened in September, has quickly become a big international draw. StubHub expects it will continue to boost ticket sales.
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The rate for the popular 30-year mortgage fell back toward 7% after hitting 8% earlier this fall.
Applications to refinance a home loan Index increased 14% from the previous week and were 10% higher than the same week one year ago.
Applications for a mortgage to purchase a home fell 0.3% for the week and were 17% lower than a year earlier.

Homes in Hercules, California, US.
Bloomberg | Bloomberg | Getty Images

After surging over 8% in October, mortgage rates are falling back toward 7% again, and that is jump-starting the refinance market.
Last week, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 7.17% from 7.37%, with points dropping to 0.60 from 0.64 (including the origination fee) for loans with a 20% down payment, according to the Mortgage Bankers Association. That was the lowest level since August.

As a result, applications to refinance a home loan increased 14% from the previous week and were 10% higher than the same week one year ago.
“Slower inflation and financial markets anticipating the potential end of the Fed’s hiking cycle are both behind the recent decline in rates,” said Joel Kan, MBA vice president and deputy chief economist. “Refinance applications saw the strongest week in two months and increased on a year-over-year basis for the second consecutive week for the first time since late 2021.”
The actual level of refinance demand, however, is still quite low, given that so many borrowers refinanced in the first years of the Covid pandemic, when rates hit more than a dozen record lows.
“Recent increases could signal that 2023 was the low point in this cycle for refinance activity, consistent with our originations forecast,” Kan added.
Applications for a mortgage to purchase a home fell 0.3% for the week and were 17% lower than the same week a year earlier. Potential buyers are still battling high prices and low inventory of homes for sale.

Mortgage rates continued to move lower this week. The government’s all-important monthly employment report, expected to be released Friday, could either continue that trend or reverse it, depending on what it says about the state of the economy.
“November was a stellar month for mortgage rates, and December is picking up right where it left off,” said Matthew Graham, chief operating officer at Mortgage News Daily. He noted that a softer-than-expected report on job openings released Tuesday helped continue the trend.
“The labor market had been running too hot. Job openings are still ‘above-trend,’ in fact, but by cooling off at a faster pace, there are positive implications for interest rates,” Graham added.  
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CVS Health said it will revamp how it prices prescription drugs, doing away with a complex model that typically determines how much pharmacies get reimbursed and how much patients pay for medications. 
The new effort makes CVS the latest company to try to upend the traditional prescription drug pricing system, which has faced years of political scrutiny for what critics call a lack of transparency and inflated health-care costs for U.S. consumers. 
CVS will launch a new model for reimbursing its pharmacies on Jan. 1, 2025, executives said during the company’s 2023 investor day. 

A person walks by a CVS pharmacy store in Manhattan, New York, U.S., November 15, 2021.
Andrew Kelly | Reuters

CVS Health on Tuesday said it will revamp how it prices prescription drugs and scrap a complex model that typically sets how much pharmacies get reimbursed and what patients pay for those medications.
The new effort makes CVS the latest company to try to upend the traditional prescription drug pricing system, which has faced years of political scrutiny for what critics call a lack of transparency and inflated health-care costs for U.S. consumers. 

CVS will launch a new model for reimbursing its pharmacies on Jan. 1, 2025 for commercial payors, executives said during the company’s 2023 investor day. 
CVS’ new model could change the cost of prescription drugs for some patients, but it will not necessarily make all medicine cost less, company executives said. Some dcirugs may cost less, while prices of others might rise, they noted. But more prescription costs should fall than climb for consumers, employers and health insurers, according to the executives.
Still, CVS is “committed to lowering drug pricing” and making the process more transparent, CEO Karen Lynch said on CNBC’s “The Exchange” on Tuesday.
“What this does is it essentially aligns the economics of our pricing for drugs to what consumers will pay at the pharmacy counter,” Lynch said of the new model. “What people have been saying is, ‘We don’t understand, it’s not transparent, it’s not easy to understand how much drugs cost.'”
“We’re changing that,” she added.

Shares of CVS closed nearly 4% higher on Tuesday following the company’s investor day, where it also issued a better 2024 revenue forecast than Wall Street expected.
CVS said the plan, named CVS CostVantage, will use a “sustainable and transparent” formula to determine a medication’s price and the corresponding reimbursement pharmacies receive from pharmacy benefit managers. Those middlemen negotiate drug discounts with manufacturers on behalf of health insurers, large employers and others that contract them. 
Under the new model, CVS’ more than 9,000 retail pharmacies will get reimbursed by PBMs and other payors based on the cost of the drug, a “clearly defined” markup, and a fee to cover handling and dispensing the prescriptions, said Prem Shah, president of CVS’ pharmacy and consumer wellness segment, during the company’s investor day. 
Lynch told CNBC: “It’s a cost plus markup, plus a fee. And that’s the transparency of what we’re trying to do.”
Currently, pharmacies are typically paid using a complicated system not directly based on what they spent to purchase drugs. That model, which involves a multitiered network of insurers, drug manufacturers, PBMs and pharmacies, leads to ambiguity around fees and markups added to the original cost of a drug.
Billionaire Mark Cuban last year launched an online pharmacy that takes a similar approach to CVS’ new reimbursement model. The company, called Cost Plus Drugs, aims to drive down the price of medicines broadly by selling them at a set 15% markup over their cost, plus pharmacy fees.
Cuban said in an email to CNBC that he has “no reaction at all” to CVS’s new model.

More CNBC health coverage

Cuban’s venture is already shaking up the broader health-care industry: CVS suffered a blow over the summer when a major California health insurer, Blue Shield of California, announced it will no longer use the company as its PBM and instead will partner with several companies, including Cuban’s firm and Amazon Pharmacy. 
CVS Health’s Caremark is one of the major PBMs in the U.S. Caremark and other PBMs have faced increased scrutiny over their role in surging drug costs, and the Federal Trade Commission is also investigating their practices.
Cuban’s drug company has put pressure on other companies that manage drug benefits to make their own changes. For example, Cigna announced last month that its PBM will offer a pricing model similar to Cost Plus Drugs. 
The Biden administration is taking its own steps to rein in prices of medications.
As part of the president’s Inflation Reduction Act, the administration in August announced the first 10 prescription drugs that will be subject to drug price negotiations with the federal Medicare program, which aims to make costly medications more affordable for older Americans.
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